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In a transfer of control application filed with the FCC last Friday, T-Mobile USA and MetroPCS cited the need for scale as the main impetus for their proposed merger, as they emphasized the difficulties the companies will face in continuing to compete independently if they do not combine. Announced on October 3, the transaction involves Deutsche Telekom (DT), the German parent of T-Mobile, which plans to acquire MetroPCS and merge it with T-Mobile into a new company (Newco) in which DT would hold a 74% stake. Shareholders of MetroPCS, a top regional wireless carrier that has built its business around prepaid, no-contract wireless services, would receive $1.6 billion in cash and a 26% stake in Newco, which ultimately will assume the T-Mobile name. DT would also assume $15 billion of the merged entity’s debt. Asserting that the FCC “is well aware of the scale and spectrum challenges facing T-Mobile USA and MetroPCS in competing today on a stand-alone basis,” the companies told the agency that the proposed deal “will strengthen and better position a combined Newco to compete on terms that neither company could achieve on its own.” Adding that T-Mobile “has a well-documented need for additional spectrum to enable an effective deployment of the high-performance 4G LTE network that it will require to remain competitive,” the companies proclaimed that the merger “will enable a broader and deeper roll-out of 4G LTE services” that include “at least 20 X 20 MHz LTE in many urban areas – which allows for higher speeds and throughput rates as well as much greater capacity.” The merger partners further observed that, because significant portions of their respective channels lie within adjacent bands in common local areas, “the combined company also can make more efficient use of the combined spectrum by eliminating guard bands between adjacent channels.” While pledging to maintain the MetroPCS business model, the companies also told the FCC that the combined entity will use T-Mobile’s existing nationwide network infrastructure “to establish MetroPCS-branded distribution in new cities where the population density would not otherwise justify the capital requirements of building a new standalone, greenfield network.” Declaring that the transaction “not only does not give rise to any competitive harms, but affirmatively increases and promotes competition,” the parties thus urged the FCC to “move promptly to conduct its review and grant the applications.”